Sunday, August 21, 2016

The Fed Loves The VIX

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*Fed Vice Chair of the rate setting committee William Dudley called the market complacent.
*Strong words.
*We think that shows up in the VIX.

Last week Fed Vice-Chair of the FOMC Rate Setting Committee William Dudley said the market was "complacent" about its expectations for future rate hikes. His complacent call reminds us that there is a lot of news coming that can affect markets. We focus on the VIX and XIV (NASDAQ:XIV) as too key measures that represent stock market (NYSEARCA:SPY) volatility.
Mr. William Dudley told Fox last week, "I think the market is complacent."
We think it's a good time to look at the VIX. If he is right he is basically calling for a jump in the VIX. The VIX measures the amount of expected volatility in the market.
Here's the chart.
The above chart shows that investors do not expect much volatility. The Fed's Vice Chair called the market "complacent." He also called the bond market "stretched."
Here's what he said on bonds.
"I would argue the one area which looks a little bit stretched to me is the bond market."

Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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